Henry Paulson’s liberal bank is taking over.
As Goldman Sachs alumni play a key role in stewarding the nation’s economy, it’s worth recalling that the late economist John Kenneth Galbraith blamed Goldman Sachs for helping to cause the Great Depression. In his book, The Great Crash, 1929, Galbraith, a key figure in President John F. Kennedy’s administration, devoted an entire chapter he titled “In Goldman, Sachs, We Trust,” to detailing the “large-scale corporate thimblerigging” that Goldman and other Wall Street firms practiced in the 1920s.
Thimbleriggers or not, supremely self-assured Goldman Sachs alumni at the highest levels of the Bush administration are now pulling the levers of power in the nation’s capital, confident that they know the way out of the current market turbulence.
Their power is likely to grow no matter who’s in charge in Washington. Commentator David Brooks may not have been joking when he observed this summer: “over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government. Over the next few, they might just take over the whole darn thing.”
It might seem reasonable to trust ex-Goldman executives because they helped build what is undeniably a spectacularly successful company. Goldman is on Fortune magazine’s 2008 list of the “Global 500” largest corporations (by revenues), which ranks it as #1 in the securities industry, #20 stateside, and #61 internationally.
But are Goldman veterans the nation’s salvation, or are they pushing the same kinds of disastrous interventionist policies that prolonged the agony of the Great Depression? Steve Milloy, portfolio manager for the Free Enterprise Action Fund, argues that Goldman alumni are working from within the Bush administration to clean up the toxic economic mess they helped to create. “It’s government by Goldman Sachs and for Goldman Sachs,” he said.
With their determination to command the financial tides, these overachieving bankers believe that they are uniquely qualified to steer the U.S. economy between the Scylla of dollar devaluation and the Charybdis of negative economic growth.
THE FINGERPRINTS of Goldman Sachs, which still managed to beat analysts’ projections and earn a hefty $845 million profit in the last quarter, are all over what are probably the most politically controversial economic policies of our time: the $700 billion Wall Street bailout, the financial affirmative action law known as the Community Reinvestment Act (CRA), and carbon emissions trading — all Big Government solutions.
But more on those policy boondoggles in a moment.
The Goldman brand has bipartisan appeal. The bank has produced Treasury secretaries for both Republican and Democratic administrations, including the current secretary, Henry Paulson, and the Clinton administration’s Robert Rubin. A Goldman veteran, Joshua Bolten, now serves as President George W. Bush’s chief of staff.
The politics of the company, founded in 1869, have long skewed left.
Goldman promotes its interests relentlessly. It has given even more money to political candidates than the famously deep-pocketed Association of Trial Lawyers of America (recently renamed American Association for Justice, with apologies to George Orwell) and is the fourth-largest political donor overall. The bank shelled out $29,588,362 over the past 20 years, mostly to Democrats, according to the Center for Responsive Politics. ABC News reported Sept. 26 that since 1989 Goldman employees have spent more than $43 million dollars on lobbying and campaign contributions to cultivate friends in Washington.
Goldman Sachs also has a history of caving in to left-wing pressure groups, such as Jesse Jackson’s Citizenship Education Fund and the extremist Rainforest Action Network (RAN). Its corporate foundation’s donations go exclusively to the left, according to a study that appeared in the August 2006 Foundation Watch.
In 2004 the Goldman Sachs Foundation gave $35.5 million to liberal non-profit groups, mostly to environmental organizations such as the Nature Conservancy and the Wildlife Conservation Society. There were no recorded contributions to conservative or free market public policy organizations.
Goldman alumni designed the recently enacted “Mother of All Bailouts.” Treasury Secretary Henry Paulson, who ran Goldman Sachs from 1999 to 2006, handpicked fellow Goldman veteran Neel Kashkari to oversee Treasury’s planned acquisition of $700 billion in distressed mortgage-related assets. Goldman, of course, will receive a chunk of that $700 billion, the Wall Street Journal reported Oct. 14.
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